February 2011

If you have been following Tomi Ahonen's blog you'll know that he is very keen on SMS as a mobile advertising platform. After all it is the killer Mobile Phone App - Smart or Dumb. So I thought it would be worth exploring his ideas a little further by taking the opportunity to compare SMS with the other mobile and Internet messaging platforms (Think Twitter, email and Facebook).

To begin the journey here is a table of the raw data from the original data sources that I have used to create the charts below: The SMS Stats are gathered from Tomi Ahonen & mobithinking. While the Facebook, Twitter and Email stats are from Royal Pingdom.

At first glance Tomi's argument that SMS is undervalued as an Advertising Platform appears self-evident. As does email when it is based on an estimate of 1% of the total global online advertising spend. As Tomi has argued before the total number of SMS users makes it easily the largest "mass" messaging media on the planet.

Things change however once we remap the figures by exploring the idea of calculating the level of user engagement with the platform.

In this first chart I have mapped the total user based against the daily frequency (i.e. Level of User Engagement with the platform) and the monthly ARPU. I have applied no cost to the activity of emailing instead bundling it in as a "Freebie" component of the monthly Internet access fee and estimating the advertising revenue generated by the email marketing industry. However if I did establish a figure for email usage within the monthly internet access fee I would anticipate that email would generate more monthly revenues than SMS.

As you can see, if we assume email to be free, SMS is the most profitable while email is by far the most frequently utilised messaging service.

The problem of course with the first chart is it doesn't account for Spam so, even though most Spam would be classified as zero cost email mass marketing, in this second chart I have applied the commonly held assumption that 90% of all emails are spam.

As you can see, if we count page hits as a substitute for messages, Facebook is now the most active messaging platform but its user base is significantly smaller than both SMS and email.

In this last chart I have mapped just the estimated Advertising Revenues as the sole source of income for each platform. As you can see Facebook is clearly the dominant advertising messaging platform because of its much higher levels of user engagement. The chart also suggests that it is email and not SMS that is underweight as an advertising platform. Plus it would appear that Twitter currently lacks the high levels of user engagement that are required to become a 'disruptive' advertising platform.

Finally, given the significantly higher levels of user engagement on Facebook, perhaps the most interesting thought is what will be the potential impact of Facebook on Telco SMS revenues if the number of users interacting with Facebook via the mobile phone dramatically increases over the next few years? Will SMS remain the private premium messaging platform or will Facebook successfully blend public and private messaging into a unified free mobile messaging platform?

[Updated] Just thought I would throw Google into the mix to illustrate that Google's search engine is as engaging as SMS but delivers almost 40x more ARPUs. The stats come from Royal Pingdom's Google Infographic. For the record the engagement modelling is based on search queries not page views.

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